MB-310 Practice Question: Implement Accounts Receivable, Credit, Collections, and Subscription Billing

Answer analysis

Option-by-option breakdown

For each option: why learners choose it and why it is or isn't the right answer here.

• ✗

  Configure the subscription billing item with a 'Revenue recognition' value of 'Monthly' and set the deferral period to 12 months.

  Why it's wrong here

  The subscription billing item does not have a 'Revenue recognition' field with a 'Monthly' value. Revenue recognition is controlled through revenue recognition schedules, not directly on the item. Setting a deferral period on the item is not a standard configuration; deferral periods are defined within the schedule. This option describes a non-existent feature and would not achieve the desired monthly recognition.

• ✗

  Create a billing schedule with a monthly frequency and assign it to the subscription.

  Why it's wrong here

  A billing schedule determines how often the customer is invoiced, not how revenue is recognized. In this scenario, the billing frequency is annual, so a monthly billing schedule would be incorrect. Revenue recognition is separate from billing and must be handled by a revenue recognition schedule. Using a billing schedule for revenue recognition would incorrectly generate monthly invoices instead of monthly revenue entries.

• ✓

  Create a revenue recognition schedule with a 'Straight line' method and assign it to the subscription billing item.

  Why this is correct

  Revenue recognition schedules in Dynamics 365 Finance allow you to defer revenue and recognize it over a specified period. By creating a schedule with the 'Straight line' method and assigning it to the subscription billing item, the system will automatically recognize revenue evenly each month over the service period. This matches the requirement to recognize revenue monthly for an annually billed subscription. The schedule must be linked to the item and the subscription billing parameters.

• ✗

  Set up a deferred revenue account in the Posting form and enable 'Defer revenue' on the subscription billing parameters.

  Why it's wrong here

  While setting up a deferred revenue account is necessary for deferral, simply enabling 'Defer revenue' on the parameters does not define the recognition pattern. The system needs a revenue recognition schedule to determine how and when to recognize the deferred amount. Without a schedule, the revenue remains deferred indefinitely or is recognized based on default settings, which may not be straight-line monthly. The specific recognition method must be configured in the schedule.